iPad mini’s popularity hurts Apple’s bottom line

January 23, 2013
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“I think cannibalization is a huge opportunity for us,” Cook said in an earnings call with analysts today. “Our core philosophy is to never fear cannibalization, if we do someone else will do it.”

Cook sees an advantage to Apple having, albeit a small, family of iPad models at different price points that can lead the charge into the tablet era.

“The iPad in particular is the mother of all opportunities,” said Cook. “The Windows market is much larger than the Mac market and it’s clear we are cannibalizing some there wit the Mac. I think I’ve said for two to three years now that the tablet market is going to be bigger than the PC market and I still believe that. You already see the growth lines starting to converge.”

Cook also said for many people the iPad or iPad mini will be their first Apple product and historically Apple’s seen a “halo effect” where a percentage of people go from there to buy other Apple products.

“Were seeing evidence of this already with the iPad,” said Cook.

Apple also faced supply issues in the past quarter, unable to keep up with demand for the iPad mini, and the problem persists. Cook said he was confident Apple could achieve a balance of iPad mini and iPad supply by this current quarter. 

Apple earnings disappoint

Apple’s shares dropped 10% in after-hours trading today after its earnings came in flat for the first time in years, disappointing Wall Street. It’s worth noting that “flat” earnings for a company the size of Apple still means billions of dollars in profit.

And there was plenty to cheer about on the sales front, including sales of a record 22.9 million iPads in the quarter, up 29% from the same quarter a year ago.

For the quarter ended Dec. 29, Apple reported a profit of $13.08 billion, up 0.1% from $13.06 billion a year earlier.


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